Wednesday, January 25, 2012

Video Game Industry to Piracy: You’re a Threat?

By Evan D. Robertson, Project Associate.

These last two decades have been somewhat of a conundrum for the media sector. Music publishing (read: the entire music industry), the movie business, and print media have been faced with two trends which completely undermine their value proposition: piracy and digital media. To combat piracy, the media industry has turned to the federal court system to prosecute individuals who have stolen the industry’s intellectual property and distributed it to the public for free. More recently, the industry’s attempt to thwart piracy was housed within their flagship legislations theStop Online Piracy Act and the Protect IP Act. Both bills were dismantled within a day after a conglomeration of technology heavy weights staged a simple, butvery effective internet campaign against the bill. For now, the industry’s piracy problem remains a concern. The media industry could use a few pointers from the interactive entertainment industry in how to effectively manage the piracy problem.

The video game industry’s approach to combat piracy is integrated right into its business model: you can only access content on a specific machine built by one of three companies (Nintendo, Sony, or Microsoft). This would be akin to only being able to listen to your favorite record on a Sony/BMI manufactured I-Pod. This control has also given the industry the opportunity to further innovate its products creating new forms of control. For example, video game producers are adding in additional downloadable content that can only be retrieved with a security code that ships with the game. The holiday hitBatman: Arkham Asylum was one of the first to utilize this feature. Producers intentionally shipped the game with 10 percent of its content missing. Once purchased, consumers can go online and use the game code to unlock its missing content. This is akin to using a similar code to purchase the special features section on a DVD. With these new measures of content control, the interactive entertainment industry effectively incentivizes users to purchase its original content while, at the same time, reduce the likelihood that their content will be pirated. The traditional media business could do well to create similar incentives for its users.